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The Growing Divide Between Silicon Valley And Unemployed America

176 points by jdp23 15y ago

dublinclontarf 15y ago
I'm not liking this bullshit of "were automating all the jobs away" that I've been hearing a lot of lately. People have unlimited wants, so it's just a crock. This is going to turn into an excuse to put a boot on the Valley's neck.
- nkassis 15y ago
  I don't understand why you think it's all BS. People might have unlimited wants but they have a limited amount of ressources to obtain those wants. The reality is, there hasn't been a real labor intensive new thing in the past 30+ years. What new thing requires massive man power to do? Even programmers, our job go easier with time. A programmer today with tools today is much more productive then he used to be. Same for most professions. Companies are outputting the same with less employees now. Productivity measures are up. That just means a more efficient society that requires more and more complex jobs that haven't yet been automated. Some people just can't do those jobs. (Now I'm going to go buy me this shirt from ThinkGeek: http://www.thinkgeek.com/tshirts-apparel/unisex/frustrations/374d/ http://www.thinkgeek.com/tshirts-apparel/unisex/frustrations...)
  - mahyarm 15y ago
    One place we could start is to create an over supply of medical doctors, pharmacists, nurses and medical researchers to reduce the cost of healthcare.
    - deleted 15y ago
      [deleted]
    - jleyank 15y ago
      Gotta figure out how to reduce the cost of drugs and lab tests as well. Which'll mean reducing the cost of lab equipment.
irrelative 15y ago
It's certainly true that the job market is going crazy in silicon valley, but the complaints in this article go against some pretty fundamental economic principles - namely that more efficient use of capital results in unemployment. Disruptive technology often results in unemployment in the short term because it cleans up inefficiencies -- look at the industrial revolution. I think it's fair to say we're richer as a society because we can automate production of goods. Yes, it put a lot of craftsmen out of work, but it was a hugely beneficial change. And so these days we have itunes putting record stores out of business. And amazon shutting down book stores. There's plenty of nostalgia for these establishments, but the things that have replaced them electronically give us incredibly better selection at less of a cost.
- DasIch 15y ago
  The assumption that unemployment caused by innovation is only short term is based on the assumption that new jobs will be created which require (roughly) the same qualifications. I think that more and more this proves to be a questionable expectation.
  - ivankirigin 15y ago
    If you don't operate under the assumption that people will work to improve their skills and learn so as to become functional and contributing members of society, you're committing to a static society or complete dependence on the government. People need to start acting like a job isn't a right but something you earn. If you think the current disruption is meaningful, just wait 10 to 20 years for robots to replace almost all service jobs in a very short time
    - gnaritas 15y ago
      > you're committing to a static society You say that as if it's a given bad thing, it isn't; humans lived in virtually static societies for most of their existence; the current rate of change is simply too fast for most people and is itself not the norm. It's like we're trying to become the Morlocks and the Eloi.
orofino 15y ago
While I understand the 'negatives' the article mentions, it doesn't provide much in the way of helpful insight as the the alternative. Sure people are losing jobs to automation, does that mean we should stop moving forward? This isn't just isolated to silicon valley or even the tech industry though. My wife is a pharmacist and to get jobs in desirable areas is highly competitive at this time. I'm sure there are other areas where this is true as well.
- code_devil 15y ago
  I think this also holds for any other country as well. Say, if you go to India, you will see a vast disparity between Mumbai and some small remote town. In Mumbai/Delhi a mechanical machine would be used to mix the cement material for construction whereas in the remote cities you might see labours manually mix the contents of cement.
skarayan 15y ago
While the overall unemployment number is a good indicator for the economy, it is far from the best indicator. Instead of looking at an overall "jobs count", perhaps we should be looking at how the state of technology (or the job market) is improving the overall efficiency in the economy. After all, our lives improve as technology becomes more efficient. For example, while Amazon may step on the shoes of the likes of Borders, look at what it is doing for consumers. On a global scale, we should be focusing on improving the lives of people, but at the same time we should continue to promote competition. The unfortunate consequence of competition is that some people lose out. To rectify this, perhaps we should focus on creating the right types of jobs and promoting constant education. In addition to the unemployment number, I wish we could see some additional metrics. At a previous job, I was responsible for data management and business intelligence. My team basically looked at the company's numbers and sliced and diced it every way possible. I would love to see some more metrics from the government. I would also love to see some better tools developed by the government to help us visualize the data. (One tool that comes to mind for this sort of stuff is an OLAP cube) Without going too far away from the point, a simple "unemployment number" isn't enough. Let's look at some more data and see where the problems are. Also, let's make this transparent so that people start talking about the details instead of one number.
- _delirium 15y ago
  I agree that overall efficiency is important, but in terms of a reasonably coherent society, the unemployment number also seems pretty important. In the long-term, either almost everyone needs some sort of job, most of the time, or we need a plan B to accomodate a large portion of the population being long-term unemployed. If, say, we have long-term 20% unemployment, even if the economy was otherwise booming, this 20% of the population with no real source of income poses a big problem. Either we have to figure how they can participate in the economy somehow (which would mean the unemployment rate would go down, solving the problem), or, if long-term there is going to be a persistent higher unemployment rate, then we have to do something different about it (perhaps a guaranteed-minimum subsistence income along the lines that Friedman and Hayek advocated).
  - 15y ago
tobias3 15y ago
It's funny that this article appeared simultaneously with this german article: http://www.tagesschau.de/wirtschaft/siliconvalley100.html http://www.tagesschau.de/wirtschaft/siliconvalley100.html (Well... it's in german) It says that one in ten people goes to the Second Harvest Food Bank for meals. Living costs are very high and that unemployment is increasing in Silicon Valley. Can somebody tell me what's true?
- alain94040 15y ago
  What's for sure is that the tech economy is booming. If you can code, people would stop you on the street and offer you a job. I'm only exaggerating a little. In the last 6 months, "we are hiring" signs have started to pop up in many stores. So the boom is not just for developers, it's also for retail positions. To me, that's the #1 proof that the economy is great (http://blog.foundrs.com/2011/04/26/the-sure-tell-sign-that-silicon-valley-is-booming-again/ http://blog.foundrs.com/2011/04/26/the-sure-tell-sign-that-s...).
matwood 15y ago
The divide isn't between SV and the unemployed, but between the educated and uneducated. From politifact: http://www.politifact.com/truth-o-meter/statements/2010/aug/17/laura-tyson/laura-tyson-says-college-grads-have-just-45-percen/ http://www.politifact.com/truth-o-meter/statements/2010/aug/... For those with less than a high school diploma, the seasonally adjusted unemployment rate was 13.8 percent during July. For those with a high school diploma but no college, the rate was 10.1 percent. For those with some college experience but no college diploma, the rate was 8.3 percent. And for those with an undergraduate degree or better, the rate was 4.5 percent. That's less than one-third of the rate for high-school dropouts -- and it's exactly as Tyson said it was. ... These aren't exactly comparable, since BLS does not release seasonally adjusted figures for those with advanced degrees. But we'll provide them anyway. The unadjusted July rate for those with masters' degrees was 4.9 percent. For those with professional degrees, it was 2.0 percent, and for those with doctorates, it was 1.9 percent. Technology has always disrupted the low end of the workforce. The big difference this time around is just how fast the disruption has occurred. It took years for farm equipment advances to remove the need for farmhands or cars to remove the need for people who do horse shoes. The internet and computers in general have put entire types of work seemingly out of business overnight. The 'new' economy is one where everyone will need to take control of their careers and constantly be thinking long term. The downside of this sort of economy is that the people who have no ambition will suffer. The upside is that those with ambition have an easier time than ever to try out their ideas and have huge upside potential.
- carbocation 15y ago
  I'm admittedly rather ignorant on the topic, but before I commit a few days to researching this I thought I'd ask here: do job losses due to technological transformations often happen during economic shocks, or is this just a one-off coincidence? The 2008 economic shock was triggered by (depending on your perspective, I suppose) lending large amounts of money to people who did not have the means to repay the loans, as well as the collateralization and sale of these debts in tranches of risk that were inaccurately calibrated. Is part of your thesis that this is somehow related to the emergence of the new economy? Is this an orthogonal but necessary trigger of job loss that causes the evaporation of old-economy jobs? Or is this unnecessary and merely coincidental?
daimyoyo 15y ago
I've been seeing this trend first hand. That's why I am learning how to code. The fact is that the jobs that provide a living wage today are based on knowledge. So you can retrain yourself, or you can be left behind.
- GrangalanJr 15y ago
  I am retraining myself, too. By inclination I am a liberal artsy guy with only a slight interest in technical stuff, but I've seen the writing on the wall and am learning to program. Turns out that it can be quite fun anyway. :-)
  - tomjen3 15y ago
    Indeed it can. But don't discount how much people who can do graphical design are needed too -- the projects advertised in the Weekend Hacker newsletter -- need a graphically skilled person over a programmer at a 3 to 1 ratio.
martinshen 15y ago
This article I feel simply explains that advancement in technology could be hurting America. Yes, change can cause damage... but change will happen no matter what. I think that the current divide is simply a educated/uneducated. Or it could be the market simply rewarding certain professions as they do with investment banking. However, it just so happens that the majority of these jobs are in SV as they do on Wall Street. Yet, I don't understand the issue the author is laying out. Is he suggesting that San Francisco and the bay area is strictly a wealthy area? Is he implying that SV is so different from other cities employment wise? Has he seem the number of homeless in San Francisco?
rorrr 15y ago
It's all about education. We just got lucky that we picked IT when we were young. My wife always laughs at me when I refuse to take a job, because "it only pays $60 per hour". Her friends and her don't have any high tech education, and $20-30/hr is their ceiling, most of them making less, and at the same time the jobs they do seem so much more boring than creating websites or building apps. We are truly lucky, guys. Enjoy the ride it while it lasts.
- orangecat 15y ago
  Indeed. I occasionally wonder what I'd be doing if I had been born a hundred years ago. I figure at best a stockbroker, more likely an accountant doing lots of manual arithmetic.
  - protomyth 15y ago
    I get the feeling a good chunk of programmers would have tried their hand at early electrical / mechanical engineering. Planes and cars were in their infant stage. Computing-Tabulating-Recording Company (IBM in 1924) would have been interesting. // Some in the IT field would have been selling snake oil, because they do it today.
  - ams6110 15y ago
    I think I would be a blacksmith or carpenter. I think building things is the underlying common factor in things that I like to do.
    - lgeek 15y ago
      This. As a kid, before getting into computers I built model ships (from scratch, ie. from plywood), played with Lego, fooled around with electronics and generally tinkered a lot. I find that similar to programming: designing and improving a project in iterations, understanding how things work by analyzing their internals, remembering processes that work, etc. So I guess that 100 years ago I would have been either into mechanical or electrical engineering or some other more traditional skilled work like carpentry.
  - 15y ago
rphlx 15y ago
The displaced worker at the bookstore/recordstore becomes a Farmville-loving, unpaid-content-producing, at-home-living, virtual-goods-buying, ad-viewing serf, kept alive by a wealthy technical elite merely to keep the system running. Welcome to The Matrix!
- paganel 15y ago
  I don't know why you've been downvotted. Anyway, I said it before, the question remains: with which money will these unemployed people buy shiny new things? Because Government handouts won't cut it.
  - rphlx 15y ago
    To me, that is the real business model innovation of social/web2.0 - college students will just move back home, saddled with debt, and entertain each other on a site you control, generating revenue for you. Their parents will fund their basic needs, at least until they themselves die or run out of credit, government subsidies, etc. It was not designed to be sustainable -- it was designed to extract as much wealth as possible for its founders, as quickly as possible, before war/peak oil/or whatever hits.
byrneseyeview 15y ago
One thing this article is missing is that lots of technology innovation is deflationary. As The Great Stagnation points out, lots of people are substituting $1 plus two hours of Farmville for a movie (and dinner out, and gas to get there). As more forms of entertainment and social status are available to the unemployed, the pressure to get a job lessens. You may not be employee of the month or drive a nice car, but if you have lots of free time you can get a pretty good mount without affecting GDP. There's an assumption that a growing middle class with an increasing standard of living is the norm. From what I can see, it's been the norm for a pretty short period, in a pretty small part of the world. There are plenty of reasons to think that the New Deal plus the GI Bill plus the Great Moderation was just a weird, aberrant part of human history.
- nostrademons 15y ago
  Would you consider a growing middle class with an increasing standard of living to be desirable, though? If it's a good thing, then it doesn't matter whether it's been the historical norm, we should work toward it.
  - byrneseyeview 15y ago
    Not especially. I prefer one more Zuck or Gates or Jobs to a million more middle-class whoevers.
    - nostrademons 15y ago
      Interesting. I think that in terms of creating a just society (which I do consider to be "good"), I'd much rather have a million more middle-class whoevers. There's no real way to resolve disagreements on questions of "oughts", though, so I think we just have to agree to disagree.
    - jleyank 15y ago
      Fail. The whoevers pay most of the taxes in the US and are the ones who purchase your products. One "killer elite" just isn't making that much $$ for Facebook, Google, ...
rdl 15y ago
The long-term structural fix is probably that "industrial" value creation (manufacturing, tech R&D, etc.) will be concentrated in a smaller and smaller number of people (essentially, Silicon Valley plus robotic factories), and that everyone else will have some kind of job which is either a service job or an artisan manufacturing job (i.e. if you can have 1k farmers with agritech produce ~1% of the world's industrial corn, you might still want to support small farmers growing heritage/etc. crops which are more labor intensive). A combination of "personal service" services jobs (while automation can reduce headcount in services too, e.g. recorded video lectures, it's a lot less effective than in manufacturing or pure information goods) and intentionally labor intensive manufacturing is a much better alternative than mass unemployment and welfare, or mass unemployment and death. The funny thing is this world almost ends up like a computer RPG; you can give away mass-produced n00b gear to everyone for free, but then the specialty stuff becomes even higher priced. It's pretty easy to argue that no one in a rich society should starve to death, but it's a lot harder to argue that the poor have a right to purely luxury versions of basic goods.
gdilla 15y ago
I transitioned from a tech company to a traditional media company. I consider myself an avg engineer at best. The shit that I can pound out (self taught) like wireframes, flowcharts, product plans, marketing plans, automating data collections, in house wikis, usability reviews, is orders of magnitude more productive than the PR person sitting next to me. And these are the people who have jobs. In otherwords, being skilled, at least techincally, really deserves to be in demand. We can always make things more efficient. That's always going to be in demand. My advice is to always think about your career a little strategically. Your skills should transcend your company and your vertical. Never give up looking at ways to be better and always be willing to learn. I see very little of that from coworkers. And after a while, those types of employees build up an impedance to being an autodidact, which imho, is career suicide. That's why I love meeting coworkers who are interested in the stuff I do and want to learn. I show them how easy it is to learn new things, and that there's tools that always make your life easier. Then their eyes light up. love that.
Spyro7 15y ago
I don't understand the point of this article (or why so many people are up-voting it). The article says that unemployment is high and then it says: "Maybe something is missing in the Valley and surrounding tech communities and that’s a stronger sense of responsibility to make sure that the vast majority of the country isn’t left behind by all this cool technology that we’re building." I'm curious, what should the technology communities do? As far as I can see, by expanding their firms and hiring additional employees these companies are already doing the responsible thing for the national economy. I realize that TC is not an economic journal, but I think that it is reasonable to expect a slightly more informed discussion of this issue without so much hyperbole. The currently high unemployment rate is not due to the technology industries growth, and, as a matter of fact, it is the expansion of the technology industry that will likely provide one of the avenues that will assist in dealing with the high unemployment rate. Just a few references: - http://www.economist.com/blogs/freeexchange/2009/03/how_much_unemployment_is_here http://www.economist.com/blogs/freeexchange/2009/03/how_much... - http://www.time.com/time/business/article/0,8599,1928261,00.html http://www.time.com/time/business/article/0,8599,1928261,00....
- erikpukinskis 15y ago
  I'm curious, what should the technology communities do? The implication I read into it was that technology companies should be aware of the plight of the poor, and try to help people out (AirBnB, Google, etc) and be careful not just to exploit them (Zynga). But maybe I'm just projecting my own beliefs. :)
  - rbarooah 15y ago
    How does google help the poor?
    - fleitz 15y ago
      By providing everyone with free search to locate information, providing them with free high quality email, adwords to market their wares/services, adsense to monetize their traffic.
RuadhanMc 15y ago
Perhaps what we need is a radical shake up of our schooling system, but also a re-evaluation or how we raise our kids. Chew on this: "Nearly 6.2 million students in the United States between the ages of 16 and 24 in 2007 dropped out of high school..." http://articles.cnn.com/2009-05-05/us/dropout.rate.study_1_dropouts-enrollment-graduations?_s=PM:US http://articles.cnn.com/2009-05-05/us/dropout.rate.study_1_d... Yikes. Something stinks. In this day and age unemployment is going to continue to be really high if there are 6.2 or so million students dropping out of high school / university per year. America (and other western countries) are not creating labor intensive industries anymore (with the exception of wars -- sad, but true), so these drop-outs are going to have real employment troubles for the rest of their 50+ years of life. Something's gotta give.
- khuey 15y ago
  Where did you get dropouts per year from? The article is saying that in the year 2007 of the cohort of individuals ages 16 to 24 6.2 million were dropouts. 16% is far too high of a dropout rate ... but 6.2 million per year is clearly impossible in a nation of ~300 million.
jonkelly 15y ago
I didn't realize the full impact of the financial meltdown until we posted on Craigslist for an office manager last month. I received 110 applications in less than 24 hours. 75 were highly qualified and the 14 I interviewed all had deep experience across the disparate functional areas we needed help in. I was stunned at the difference between that experience and our attempts to find more Java developers, where we've heard crickets.
- klbarry 15y ago
  That's pretty sad to hear, in a societal sense. What kind of work does an office manager at your company do?
commanda 15y ago
At one point, I (naively) thought that by starting a company, I would be helping to alleviate unemployment in the US because I would be creating jobs. Now I realize that the programmers and designers I employ are/will be people who could have their choice of jobs, because I'm only hiring the smartest and most skilled. I'm effectively not altering the unemployment rate by adding jobs for the sector of the population that is in the least need of work. So, I don't think it's possible for us (people who work at companies whose product is technology) to help create jobs for people without tech skills.
- gaius 15y ago
  You kinda are tho', because those "smartest" people working for you are no longer competing for jobs at Starbucks.
grellas 15y ago
Maybe something is missing in the Valley and surrounding tech communities and that’s a stronger sense of responsibility to make sure that the vast majority of the country isn’t left behind by all this cool technology that we’re building. And just how does one build a startup with all that such an effort normally entails while factoring in the need to make sure others aren't "left behind" as that startup pushes on toward a hoped-for success? This issue can't even be discussed in meaningful terms. We all, of course, share in the problems of society and we all do our bit in trying to help with such problems - and who can help but feel for those who are suffering. That is a given for most people. But what then? Do I operate my business so that it doesn't eliminate any competitor in hopes of saving that competitor's jobs for its employees? Do I refrain from introducing disruptive technologies because they might actually disrupt the lives of others? Do I ask my representatives to enact laws granting permanent subsidies to companies such as Border's, Blockbuster, Tower Records, and so many others so that they can continue in business offering products or services that people more and more don't want? Or how about passing an innovation tax to capture the all the profits of the successful tech companies so as to level the playing field? Or how about a law banning all disruptive technologies so that we can all enjoy a world that resembles the one we knew a few decades ago? The point, I think, is that startups exist on their own terms in a free enterprise system. The goal of a business venture is to succeed in a marketplace, not to ensure that others aren't affected by one's activities. Nor is the goal of a venture to give away what it earns to salvage the prospects of others who are failing. Individuals can do that if they like, and that is an issue of private conscience on what one does with private wealth. But it is not meaningful, in my view, to tell entrepreneurs to run their ventures with the aim of solving social problems as opposed to that of succeeding in a marketplace. When you try to do that, you wind up mixing up the goals of private venturing with those of broader social institutions such as government or those of private charitable impulse. That is why even to pose the question first stated above is to expose this as flawed thinking about the legitimate business concerns of a tech company. This piece is a variation on the lament expressed in the piece from a few days ago about how Silicon Valley founders and entrepreneurs are (in effect) shallow, self-absorbed types who can't think beyond the next trivial innovation in hopes of gaining a quick-kill exit even as they neglect a slew of problems that beset humanity and are crying out for solutions if only these narrow types just had a larger vision and greater sense of social responsibility (http://news.ycombinator.com/item?id=2760540 http://news.ycombinator.com/item?id=2760540 - of course, the piece had not put it in those exact terms but I hope I captured its flavor even as I used license in recasting its claims). I hate to come across as narrow-minded but it really crosses a line to lecture the tech startup world about its moral responsibility as if "it" were a monolithic entity that had responsibilities beyond those that define what a given business venture is supposed to do. At best, this amounts to discussing the important issues in confused terms; at worst, it amounts to an author smugly claiming more refined sensibilities than the mere grubbers upon whom the author is passing a misdirected moral judgment.
johnarleyburns 15y ago
This article unfortunately can't get its facts straight. Silicon Valley has a higher, not lower, unemployment rate than the average across America: http://www.bls.gov/eag/eag.ca_sanjose_msa.htm http://www.bls.gov/eag/eag.ca_sanjose_msa.htm And the unemployment rate is drastically, almost 3x, higher than Fargo, ND: http://www.bls.gov/eag/eag.nd_fargo_msa.htm http://www.bls.gov/eag/eag.nd_fargo_msa.htm It's really sad that the state of journalism has dropped so low, and the Valley fever gone so high, that people can't get basic facts straight. Then again, it may be that people spending most of their time trying to raise money from rich people have a particular brand of social myopia.
estrategy 15y ago
The fact is there is 1000x more VC and angel capital in the Bay Area willing to fund "any idea". This does not exist anywhere else and startup money does not travel.
bugsy 15y ago
The article's analysis is severely flawed, and I suspect intentionally so. It tries to lay the blame on inventors, innovation and technology workers for the unemployment of unskilled workers. We don't have enough manufacturing jobs in the country not because technology has made it so that everything is made by robots in gleaming factories. We don't have enough manufacturing jobs in the country because we have zero import tariffs for countries that use slave labor and have no enforced environmental regulations. This is a situation created by globalist bankers, not inventors.
Vivtek 15y ago
Balderdash. There's no responsibility to go slower so people can catch up. If there's honestly a cultural divide between Silicon Valley and Unemployed America, then there ought to be some serious money to be made on things that help Unemployed America that people in Silicon Valley aren't going to find (which is good news for me, if I can just figure out what those things are). Expect this to be one of the things that ends this recession/depression - but blaming macroeconomic screwups on the only people around not screwing up is not the answer.
ericd 15y ago
The comments on this article on TC seem like a pretty strong argument for disabling Yahoo as a way to comment.
blumentopf 15y ago
For those interested in an outside view and capable of German, "tagesschau" (flagship news programme on German TV) today aired two stories on this topic: Die Verlierer im Silicon Valley (The losers in Silicon Valley) http://www.tagesschau.de/wirtschaft/siliconvalley100.html http://www.tagesschau.de/wirtschaft/siliconvalley100.html Erst ist das Haus weg, dann der Job, dann die Kinder... (First they lost their house, then their jobs, then their children...) http://www.tagesschau.de/ausland/weltspiegel382.html http://www.tagesschau.de/ausland/weltspiegel382.html

176 points by jdp23 15y ago

I'm not liking this bullshit of "were automating all the jobs away" that I've been hearing a lot of lately. People have unlimited wants, so it's just a crock. This is going to turn into an excuse to put a boot on the Valley's neck.

nkassis 15y ago
I don't understand why you think it's all BS. People might have unlimited wants but they have a limited amount of ressources to obtain those wants. The reality is, there hasn't been a real labor intensive new thing in the past 30+ years. What new thing requires massive man power to do? Even programmers, our job go easier with time. A programmer today with tools today is much more productive then he used to be. Same for most professions. Companies are outputting the same with less employees now. Productivity measures are up. That just means a more efficient society that requires more and more complex jobs that haven't yet been automated. Some people just can't do those jobs. (Now I'm going to go buy me this shirt from ThinkGeek: http://www.thinkgeek.com/tshirts-apparel/unisex/frustrations/374d/ http://www.thinkgeek.com/tshirts-apparel/unisex/frustrations...)
- mahyarm 15y ago
  One place we could start is to create an over supply of medical doctors, pharmacists, nurses and medical researchers to reduce the cost of healthcare.
  - deleted 15y ago
    [deleted]
  - jleyank 15y ago
    Gotta figure out how to reduce the cost of drugs and lab tests as well. Which'll mean reducing the cost of lab equipment.

irrelative 15y ago

It's certainly true that the job market is going crazy in silicon valley, but the complaints in this article go against some pretty fundamental economic principles - namely that more efficient use of capital results in unemployment. Disruptive technology often results in unemployment in the short term because it cleans up inefficiencies -- look at the industrial revolution. I think it's fair to say we're richer as a society because we can automate production of goods. Yes, it put a lot of craftsmen out of work, but it was a hugely beneficial change. And so these days we have itunes putting record stores out of business. And amazon shutting down book stores. There's plenty of nostalgia for these establishments, but the things that have replaced them electronically give us incredibly better selection at less of a cost.

DasIch 15y ago
The assumption that unemployment caused by innovation is only short term is based on the assumption that new jobs will be created which require (roughly) the same qualifications. I think that more and more this proves to be a questionable expectation.
- ivankirigin 15y ago
  If you don't operate under the assumption that people will work to improve their skills and learn so as to become functional and contributing members of society, you're committing to a static society or complete dependence on the government. People need to start acting like a job isn't a right but something you earn. If you think the current disruption is meaningful, just wait 10 to 20 years for robots to replace almost all service jobs in a very short time
  - gnaritas 15y ago
    > you're committing to a static society You say that as if it's a given bad thing, it isn't; humans lived in virtually static societies for most of their existence; the current rate of change is simply too fast for most people and is itself not the norm. It's like we're trying to become the Morlocks and the Eloi.

orofino 15y ago

While I understand the 'negatives' the article mentions, it doesn't provide much in the way of helpful insight as the the alternative. Sure people are losing jobs to automation, does that mean we should stop moving forward? This isn't just isolated to silicon valley or even the tech industry though. My wife is a pharmacist and to get jobs in desirable areas is highly competitive at this time. I'm sure there are other areas where this is true as well.

code_devil 15y ago
I think this also holds for any other country as well. Say, if you go to India, you will see a vast disparity between Mumbai and some small remote town. In Mumbai/Delhi a mechanical machine would be used to mix the cement material for construction whereas in the remote cities you might see labours manually mix the contents of cement.

skarayan 15y ago

While the overall unemployment number is a good indicator for the economy, it is far from the best indicator. Instead of looking at an overall "jobs count", perhaps we should be looking at how the state of technology (or the job market) is improving the overall efficiency in the economy. After all, our lives improve as technology becomes more efficient. For example, while Amazon may step on the shoes of the likes of Borders, look at what it is doing for consumers. On a global scale, we should be focusing on improving the lives of people, but at the same time we should continue to promote competition. The unfortunate consequence of competition is that some people lose out. To rectify this, perhaps we should focus on creating the right types of jobs and promoting constant education. In addition to the unemployment number, I wish we could see some additional metrics. At a previous job, I was responsible for data management and business intelligence. My team basically looked at the company's numbers and sliced and diced it every way possible. I would love to see some more metrics from the government. I would also love to see some better tools developed by the government to help us visualize the data. (One tool that comes to mind for this sort of stuff is an OLAP cube) Without going too far away from the point, a simple "unemployment number" isn't enough. Let's look at some more data and see where the problems are. Also, let's make this transparent so that people start talking about the details instead of one number.

_delirium 15y ago
I agree that overall efficiency is important, but in terms of a reasonably coherent society, the unemployment number also seems pretty important. In the long-term, either almost everyone needs some sort of job, most of the time, or we need a plan B to accomodate a large portion of the population being long-term unemployed. If, say, we have long-term 20% unemployment, even if the economy was otherwise booming, this 20% of the population with no real source of income poses a big problem. Either we have to figure how they can participate in the economy somehow (which would mean the unemployment rate would go down, solving the problem), or, if long-term there is going to be a persistent higher unemployment rate, then we have to do something different about it (perhaps a guaranteed-minimum subsistence income along the lines that Friedman and Hayek advocated).
- 15y ago

tobias3 15y ago

It's funny that this article appeared simultaneously with this german article: http://www.tagesschau.de/wirtschaft/siliconvalley100.html http://www.tagesschau.de/wirtschaft/siliconvalley100.html (Well... it's in german) It says that one in ten people goes to the Second Harvest Food Bank for meals. Living costs are very high and that unemployment is increasing in Silicon Valley. Can somebody tell me what's true?

alain94040 15y ago
What's for sure is that the tech economy is booming. If you can code, people would stop you on the street and offer you a job. I'm only exaggerating a little. In the last 6 months, "we are hiring" signs have started to pop up in many stores. So the boom is not just for developers, it's also for retail positions. To me, that's the #1 proof that the economy is great (http://blog.foundrs.com/2011/04/26/the-sure-tell-sign-that-silicon-valley-is-booming-again/ http://blog.foundrs.com/2011/04/26/the-sure-tell-sign-that-s...).

matwood 15y ago

The divide isn't between SV and the unemployed, but between the educated and uneducated. From politifact: http://www.politifact.com/truth-o-meter/statements/2010/aug/17/laura-tyson/laura-tyson-says-college-grads-have-just-45-percen/ http://www.politifact.com/truth-o-meter/statements/2010/aug/... For those with less than a high school diploma, the seasonally adjusted unemployment rate was 13.8 percent during July. For those with a high school diploma but no college, the rate was 10.1 percent. For those with some college experience but no college diploma, the rate was 8.3 percent. And for those with an undergraduate degree or better, the rate was 4.5 percent. That's less than one-third of the rate for high-school dropouts -- and it's exactly as Tyson said it was. ... These aren't exactly comparable, since BLS does not release seasonally adjusted figures for those with advanced degrees. But we'll provide them anyway. The unadjusted July rate for those with masters' degrees was 4.9 percent. For those with professional degrees, it was 2.0 percent, and for those with doctorates, it was 1.9 percent. Technology has always disrupted the low end of the workforce. The big difference this time around is just how fast the disruption has occurred. It took years for farm equipment advances to remove the need for farmhands or cars to remove the need for people who do horse shoes. The internet and computers in general have put entire types of work seemingly out of business overnight. The 'new' economy is one where everyone will need to take control of their careers and constantly be thinking long term. The downside of this sort of economy is that the people who have no ambition will suffer. The upside is that those with ambition have an easier time than ever to try out their ideas and have huge upside potential.

carbocation 15y ago
I'm admittedly rather ignorant on the topic, but before I commit a few days to researching this I thought I'd ask here: do job losses due to technological transformations often happen during economic shocks, or is this just a one-off coincidence? The 2008 economic shock was triggered by (depending on your perspective, I suppose) lending large amounts of money to people who did not have the means to repay the loans, as well as the collateralization and sale of these debts in tranches of risk that were inaccurately calibrated. Is part of your thesis that this is somehow related to the emergence of the new economy? Is this an orthogonal but necessary trigger of job loss that causes the evaporation of old-economy jobs? Or is this unnecessary and merely coincidental?

daimyoyo 15y ago

I've been seeing this trend first hand. That's why I am learning how to code. The fact is that the jobs that provide a living wage today are based on knowledge. So you can retrain yourself, or you can be left behind.

GrangalanJr 15y ago
I am retraining myself, too. By inclination I am a liberal artsy guy with only a slight interest in technical stuff, but I've seen the writing on the wall and am learning to program. Turns out that it can be quite fun anyway. :-)
- tomjen3 15y ago
  Indeed it can. But don't discount how much people who can do graphical design are needed too -- the projects advertised in the Weekend Hacker newsletter -- need a graphically skilled person over a programmer at a 3 to 1 ratio.

martinshen 15y ago

This article I feel simply explains that advancement in technology could be hurting America. Yes, change can cause damage... but change will happen no matter what. I think that the current divide is simply a educated/uneducated. Or it could be the market simply rewarding certain professions as they do with investment banking. However, it just so happens that the majority of these jobs are in SV as they do on Wall Street. Yet, I don't understand the issue the author is laying out. Is he suggesting that San Francisco and the bay area is strictly a wealthy area? Is he implying that SV is so different from other cities employment wise? Has he seem the number of homeless in San Francisco?

rorrr 15y ago

It's all about education. We just got lucky that we picked IT when we were young. My wife always laughs at me when I refuse to take a job, because "it only pays $60 per hour". Her friends and her don't have any high tech education, and $20-30/hr is their ceiling, most of them making less, and at the same time the jobs they do seem so much more boring than creating websites or building apps. We are truly lucky, guys. Enjoy the ride it while it lasts.

orangecat 15y ago
Indeed. I occasionally wonder what I'd be doing if I had been born a hundred years ago. I figure at best a stockbroker, more likely an accountant doing lots of manual arithmetic.
- protomyth 15y ago
  I get the feeling a good chunk of programmers would have tried their hand at early electrical / mechanical engineering. Planes and cars were in their infant stage. Computing-Tabulating-Recording Company (IBM in 1924) would have been interesting. // Some in the IT field would have been selling snake oil, because they do it today.
- ams6110 15y ago
  I think I would be a blacksmith or carpenter. I think building things is the underlying common factor in things that I like to do.
  - lgeek 15y ago
    This. As a kid, before getting into computers I built model ships (from scratch, ie. from plywood), played with Lego, fooled around with electronics and generally tinkered a lot. I find that similar to programming: designing and improving a project in iterations, understanding how things work by analyzing their internals, remembering processes that work, etc. So I guess that 100 years ago I would have been either into mechanical or electrical engineering or some other more traditional skilled work like carpentry.
- 15y ago

rphlx 15y ago

The displaced worker at the bookstore/recordstore becomes a Farmville-loving, unpaid-content-producing, at-home-living, virtual-goods-buying, ad-viewing serf, kept alive by a wealthy technical elite merely to keep the system running. Welcome to The Matrix!

paganel 15y ago
I don't know why you've been downvotted. Anyway, I said it before, the question remains: with which money will these unemployed people buy shiny new things? Because Government handouts won't cut it.
- rphlx 15y ago
  To me, that is the real business model innovation of social/web2.0 - college students will just move back home, saddled with debt, and entertain each other on a site you control, generating revenue for you. Their parents will fund their basic needs, at least until they themselves die or run out of credit, government subsidies, etc. It was not designed to be sustainable -- it was designed to extract as much wealth as possible for its founders, as quickly as possible, before war/peak oil/or whatever hits.

byrneseyeview 15y ago

One thing this article is missing is that lots of technology innovation is deflationary. As The Great Stagnation points out, lots of people are substituting $1 plus two hours of Farmville for a movie (and dinner out, and gas to get there). As more forms of entertainment and social status are available to the unemployed, the pressure to get a job lessens. You may not be employee of the month or drive a nice car, but if you have lots of free time you can get a pretty good mount without affecting GDP. There's an assumption that a growing middle class with an increasing standard of living is the norm. From what I can see, it's been the norm for a pretty short period, in a pretty small part of the world. There are plenty of reasons to think that the New Deal plus the GI Bill plus the Great Moderation was just a weird, aberrant part of human history.

nostrademons 15y ago
Would you consider a growing middle class with an increasing standard of living to be desirable, though? If it's a good thing, then it doesn't matter whether it's been the historical norm, we should work toward it.
- byrneseyeview 15y ago
  Not especially. I prefer one more Zuck or Gates or Jobs to a million more middle-class whoevers.
  - nostrademons 15y ago
    Interesting. I think that in terms of creating a just society (which I do consider to be "good"), I'd much rather have a million more middle-class whoevers. There's no real way to resolve disagreements on questions of "oughts", though, so I think we just have to agree to disagree.
  - jleyank 15y ago
    Fail. The whoevers pay most of the taxes in the US and are the ones who purchase your products. One "killer elite" just isn't making that much $$ for Facebook, Google, ...

rdl 15y ago

The long-term structural fix is probably that "industrial" value creation (manufacturing, tech R&D, etc.) will be concentrated in a smaller and smaller number of people (essentially, Silicon Valley plus robotic factories), and that everyone else will have some kind of job which is either a service job or an artisan manufacturing job (i.e. if you can have 1k farmers with agritech produce ~1% of the world's industrial corn, you might still want to support small farmers growing heritage/etc. crops which are more labor intensive). A combination of "personal service" services jobs (while automation can reduce headcount in services too, e.g. recorded video lectures, it's a lot less effective than in manufacturing or pure information goods) and intentionally labor intensive manufacturing is a much better alternative than mass unemployment and welfare, or mass unemployment and death. The funny thing is this world almost ends up like a computer RPG; you can give away mass-produced n00b gear to everyone for free, but then the specialty stuff becomes even higher priced. It's pretty easy to argue that no one in a rich society should starve to death, but it's a lot harder to argue that the poor have a right to purely luxury versions of basic goods.

gdilla 15y ago

I transitioned from a tech company to a traditional media company. I consider myself an avg engineer at best. The shit that I can pound out (self taught) like wireframes, flowcharts, product plans, marketing plans, automating data collections, in house wikis, usability reviews, is orders of magnitude more productive than the PR person sitting next to me. And these are the people who have jobs. In otherwords, being skilled, at least techincally, really deserves to be in demand. We can always make things more efficient. That's always going to be in demand. My advice is to always think about your career a little strategically. Your skills should transcend your company and your vertical. Never give up looking at ways to be better and always be willing to learn. I see very little of that from coworkers. And after a while, those types of employees build up an impedance to being an autodidact, which imho, is career suicide. That's why I love meeting coworkers who are interested in the stuff I do and want to learn. I show them how easy it is to learn new things, and that there's tools that always make your life easier. Then their eyes light up. love that.

Spyro7 15y ago

I don't understand the point of this article (or why so many people are up-voting it). The article says that unemployment is high and then it says: "Maybe something is missing in the Valley and surrounding tech communities and that’s a stronger sense of responsibility to make sure that the vast majority of the country isn’t left behind by all this cool technology that we’re building." I'm curious, what should the technology communities do? As far as I can see, by expanding their firms and hiring additional employees these companies are already doing the responsible thing for the national economy. I realize that TC is not an economic journal, but I think that it is reasonable to expect a slightly more informed discussion of this issue without so much hyperbole. The currently high unemployment rate is not due to the technology industries growth, and, as a matter of fact, it is the expansion of the technology industry that will likely provide one of the avenues that will assist in dealing with the high unemployment rate. Just a few references: - http://www.economist.com/blogs/freeexchange/2009/03/how_much_unemployment_is_here http://www.economist.com/blogs/freeexchange/2009/03/how_much... - http://www.time.com/time/business/article/0,8599,1928261,00.html http://www.time.com/time/business/article/0,8599,1928261,00....

erikpukinskis 15y ago
I'm curious, what should the technology communities do? The implication I read into it was that technology companies should be aware of the plight of the poor, and try to help people out (AirBnB, Google, etc) and be careful not just to exploit them (Zynga). But maybe I'm just projecting my own beliefs. :)
- rbarooah 15y ago
  How does google help the poor?
  - fleitz 15y ago
    By providing everyone with free search to locate information, providing them with free high quality email, adwords to market their wares/services, adsense to monetize their traffic.

RuadhanMc 15y ago

Perhaps what we need is a radical shake up of our schooling system, but also a re-evaluation or how we raise our kids. Chew on this: "Nearly 6.2 million students in the United States between the ages of 16 and 24 in 2007 dropped out of high school..." http://articles.cnn.com/2009-05-05/us/dropout.rate.study_1_dropouts-enrollment-graduations?_s=PM:US http://articles.cnn.com/2009-05-05/us/dropout.rate.study_1_d... Yikes. Something stinks. In this day and age unemployment is going to continue to be really high if there are 6.2 or so million students dropping out of high school / university per year. America (and other western countries) are not creating labor intensive industries anymore (with the exception of wars -- sad, but true), so these drop-outs are going to have real employment troubles for the rest of their 50+ years of life. Something's gotta give.

khuey 15y ago
Where did you get dropouts per year from? The article is saying that in the year 2007 of the cohort of individuals ages 16 to 24 6.2 million were dropouts. 16% is far too high of a dropout rate ... but 6.2 million per year is clearly impossible in a nation of ~300 million.

jonkelly 15y ago

I didn't realize the full impact of the financial meltdown until we posted on Craigslist for an office manager last month. I received 110 applications in less than 24 hours. 75 were highly qualified and the 14 I interviewed all had deep experience across the disparate functional areas we needed help in. I was stunned at the difference between that experience and our attempts to find more Java developers, where we've heard crickets.

klbarry 15y ago
That's pretty sad to hear, in a societal sense. What kind of work does an office manager at your company do?

commanda 15y ago

At one point, I (naively) thought that by starting a company, I would be helping to alleviate unemployment in the US because I would be creating jobs. Now I realize that the programmers and designers I employ are/will be people who could have their choice of jobs, because I'm only hiring the smartest and most skilled. I'm effectively not altering the unemployment rate by adding jobs for the sector of the population that is in the least need of work. So, I don't think it's possible for us (people who work at companies whose product is technology) to help create jobs for people without tech skills.

gaius 15y ago
You kinda are tho', because those "smartest" people working for you are no longer competing for jobs at Starbucks.

grellas 15y ago

Maybe something is missing in the Valley and surrounding tech communities and that’s a stronger sense of responsibility to make sure that the vast majority of the country isn’t left behind by all this cool technology that we’re building. And just how does one build a startup with all that such an effort normally entails while factoring in the need to make sure others aren't "left behind" as that startup pushes on toward a hoped-for success? This issue can't even be discussed in meaningful terms. We all, of course, share in the problems of society and we all do our bit in trying to help with such problems - and who can help but feel for those who are suffering. That is a given for most people. But what then? Do I operate my business so that it doesn't eliminate any competitor in hopes of saving that competitor's jobs for its employees? Do I refrain from introducing disruptive technologies because they might actually disrupt the lives of others? Do I ask my representatives to enact laws granting permanent subsidies to companies such as Border's, Blockbuster, Tower Records, and so many others so that they can continue in business offering products or services that people more and more don't want? Or how about passing an innovation tax to capture the all the profits of the successful tech companies so as to level the playing field? Or how about a law banning all disruptive technologies so that we can all enjoy a world that resembles the one we knew a few decades ago? The point, I think, is that startups exist on their own terms in a free enterprise system. The goal of a business venture is to succeed in a marketplace, not to ensure that others aren't affected by one's activities. Nor is the goal of a venture to give away what it earns to salvage the prospects of others who are failing. Individuals can do that if they like, and that is an issue of private conscience on what one does with private wealth. But it is not meaningful, in my view, to tell entrepreneurs to run their ventures with the aim of solving social problems as opposed to that of succeeding in a marketplace. When you try to do that, you wind up mixing up the goals of private venturing with those of broader social institutions such as government or those of private charitable impulse. That is why even to pose the question first stated above is to expose this as flawed thinking about the legitimate business concerns of a tech company. This piece is a variation on the lament expressed in the piece from a few days ago about how Silicon Valley founders and entrepreneurs are (in effect) shallow, self-absorbed types who can't think beyond the next trivial innovation in hopes of gaining a quick-kill exit even as they neglect a slew of problems that beset humanity and are crying out for solutions if only these narrow types just had a larger vision and greater sense of social responsibility (http://news.ycombinator.com/item?id=2760540 http://news.ycombinator.com/item?id=2760540 - of course, the piece had not put it in those exact terms but I hope I captured its flavor even as I used license in recasting its claims). I hate to come across as narrow-minded but it really crosses a line to lecture the tech startup world about its moral responsibility as if "it" were a monolithic entity that had responsibilities beyond those that define what a given business venture is supposed to do. At best, this amounts to discussing the important issues in confused terms; at worst, it amounts to an author smugly claiming more refined sensibilities than the mere grubbers upon whom the author is passing a misdirected moral judgment.

johnarleyburns 15y ago

This article unfortunately can't get its facts straight. Silicon Valley has a higher, not lower, unemployment rate than the average across America: http://www.bls.gov/eag/eag.ca_sanjose_msa.htm http://www.bls.gov/eag/eag.ca_sanjose_msa.htm And the unemployment rate is drastically, almost 3x, higher than Fargo, ND: http://www.bls.gov/eag/eag.nd_fargo_msa.htm http://www.bls.gov/eag/eag.nd_fargo_msa.htm It's really sad that the state of journalism has dropped so low, and the Valley fever gone so high, that people can't get basic facts straight. Then again, it may be that people spending most of their time trying to raise money from rich people have a particular brand of social myopia.

estrategy 15y ago

The fact is there is 1000x more VC and angel capital in the Bay Area willing to fund "any idea". This does not exist anywhere else and startup money does not travel.

bugsy 15y ago

The article's analysis is severely flawed, and I suspect intentionally so. It tries to lay the blame on inventors, innovation and technology workers for the unemployment of unskilled workers. We don't have enough manufacturing jobs in the country not because technology has made it so that everything is made by robots in gleaming factories. We don't have enough manufacturing jobs in the country because we have zero import tariffs for countries that use slave labor and have no enforced environmental regulations. This is a situation created by globalist bankers, not inventors.

Vivtek 15y ago

Balderdash. There's no responsibility to go slower so people can catch up. If there's honestly a cultural divide between Silicon Valley and Unemployed America, then there ought to be some serious money to be made on things that help Unemployed America that people in Silicon Valley aren't going to find (which is good news for me, if I can just figure out what those things are). Expect this to be one of the things that ends this recession/depression - but blaming macroeconomic screwups on the only people around not screwing up is not the answer.

ericd 15y ago

The comments on this article on TC seem like a pretty strong argument for disabling Yahoo as a way to comment.

blumentopf 15y ago

For those interested in an outside view and capable of German, "tagesschau" (flagship news programme on German TV) today aired two stories on this topic: Die Verlierer im Silicon Valley (The losers in Silicon Valley) http://www.tagesschau.de/wirtschaft/siliconvalley100.html http://www.tagesschau.de/wirtschaft/siliconvalley100.html Erst ist das Haus weg, dann der Job, dann die Kinder... (First they lost their house, then their jobs, then their children...) http://www.tagesschau.de/ausland/weltspiegel382.html http://www.tagesschau.de/ausland/weltspiegel382.html